Hillary hints at reversal from ’08 on capital gains. Does it matter?

Last week, we noted that Hillary Clinton’s Wall Street backers were meeting her campaign-trail populism with a resounding shoulder shrug. They are fairly certain that her tough talk on the financial sector is just that: talk. They don’t seriously believe that, if elected, she would push hard to do anything that could affect their quarterly earnings in a meaningful way.

That confidence is being tested again this week, as Clinton hinted yesterday that she would, as President, “take a hard look at what is now being done in the trading world, which is just trading for the sake of trading.”

That would include capital gains taxes. Said Clinton, as quoted by Bloomberg:

“We have to look at the whole tax system and try to figure out what is an economic investment as opposed to one without economic purpose because there are a lot of those where people are just basically playing games,” [Clinton] said. The capital gains tax, she reminded, was introduced as “a way to reward people who made risky investments” in businesses, not to reward people who trade financial products.

This hint at tweaking the capital gains tax in a serious manner would be a fairly significant departure from where then-Senator Clinton stood on the issue in 2008. In an April 18, 2008 debate with then-Senator Obama, she placed herself firmly to his right by saying that she would consider raising capital gains taxes, but not past 20 percent.

Of course, even this tack to the left, like her other liberal olive branches of late, is couched in qualifications that give her an out if and when she decides that she doesn’t need to curry favor with the Elizabeth Warren wing of the Democratic Party. With specific policy proposals yet to be rolled out, Clinton precedes all of her ideological stances with “we’ll have to take a look” or “we’ll see” or “there’s a problem when,” and finishes them with…nada.

The lone exception is her endorsement of a constitutional amendment overturning Citizens United, which others have pointed is both hopeless and misguided, a transparently political bone thrown to Democratic activists.

There are a number of ways to reform our capital gains tax such that it reduces the incentive for gambling and flash trading, and replaces it with an incentive to invest. One such way would be to pro-rate the tax based on how long the stock is held. I know, I know, we sort of already do that — but we really don’t.

Hillary Clinton campaigning in 2008, via Creative Commons

Hillary Clinton campaigning in 2008, via Creative Commons

Currently, capital gains on stock held for less than a year are taxed as income, while capital gains on stock held for more than a year is taxed at 15 percent. This doesn’t do much to discourage speculation, and allows for the mega-wealthy to sidestep the progressive income tax because their earnings aren’t being taxed as income in the first place.

A much fairer system, as I’ve written before, would be to tax capital gains at 99% for stock held less than a day — to discourage automated flash-trading that both unfairly advantages day traders who can afford the hardware necessary to do it and has the potential to shock the system if and when an algorithm goes awry — and gradually decrease the rate based on how long the stock is held until you get to one year. After one year, the gains are taxed as income.

Hillary Clinton doesn’t have to adopt that proposal. It’s just an idea, and I only took so much econ in college. But she has to come out with something beyond “we need to look at those gosh darn tax rates, now don’t we?” in order for the left to take her newfound populism seriously. Until she starts backing up her hints with actual policy ideas, it’s going to be hard to see Clinton 2016 as having added any liberal value beyond what she brought to the table in 2008.


Jon Green graduated from Kenyon College with a B.A. in Political Science and high honors in Political Cognition. He worked as a field organizer for Congressman Tom Perriello in 2010 and a Regional Field Director for President Obama's re-election campaign in 2012. Jon writes on a number of topics, but pays especially close attention to elections, religion and political cognition. Follow him on Twitter at @_Jon_Green, and on Google+. .

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22 Responses to “Hillary hints at reversal from ’08 on capital gains. Does it matter?”

  1. mirth says:

    That’s ok. I know you are a busy man.

    As I wrote above, it’s mostly wingnut sites on it now, but what most caught my interest is that while many people are affected, it came and went very quickly on msm. Barely a mention. I realize these events aren’t in conflict with Posse Comitatus, but they are disturbing to me and I’m not sure why, hence the request.

    http://rt.com/usa/244969-texas-martial-law-army/

    http://www.newswest9.com/story/28826943/big-spring-invites-army-to-conduct-special-ops-training-in-city

    And they aren’t the first of a kind:

    http://www.nola.com/military/index.ssf/2013/05/us_special_forces_behind_last.html

    https://www.youtube.com/watch?v=yQ1KRkDwj34

  2. Jon Green says:

    Sorry, just saw this.

    Shoot me a few links to get started? I’ll dig more from there.

  3. Bill_Perdue says:

    No such leaders exist in a capitalist context and especially in an electoral context.

    They do exist as part of a democratically elected collective leadership to organize unions, the union left and mass movements for social change. “Leaders” like Allende in Chile, Chavez in Venezuela, Tsipras (who leads SYRIZA in Greece) and their followers all made the fundamental mistake of allowing the old capitalist state to exist and not making plans to democratize the economy, dismantle the armed forces and the police and create a workers state.

    That failure of leadership produced a disaster in Chile, is likely to produce a disaster in Venezuela and may produce one in Greece.

    Now, under the impact of the new radicalization a number of left and left labor groups are throwing up a whole new layer of leaders and the best of them will embrace fundamental change and build a new leadership in the US to replace the ones that failed after the demise of the radicalization of the 1960’s and and 1970’s.

  4. mirth says:

    Of course it takes more than a single person, but a leader must be front and center to gather the forces and then lead the charge. Who do you see as a leader for Socialists?

  5. mirth says:

    No, I don’t believe the whole arms shipment intercept story either.
    (Likewise, there’s a bunch more we don’t know about the supposed Obama/Bibi breakup, the full truth likely tied to this possible intercept ruse situation.)

    But here I’m asking Jon about our military training within US cities. It seems to me a too big story not to dig into.

  6. Houndentenor says:

    I spent many hours over the last three days trying to get someone from the billing company my doctor’s office uses to talk to me or return a message so that a claim that should have been filed a couple of months ago will finally be processed and I can be reimbursed. (I shouldn’t have been charged in the first place.) That took two days. I had to google the number at which there is no live person to get the name of the company and email execs of that company directly to get any response. Then I was told that they filed the claim over a month ago. What bloody nightmare. And this is just over $168. What’s it like when it’s thousands? Go bankrupt I guess. Our system does not work for us. it works for the corporations that are bleeding us dry. Hillary is a part of this system and not much better than the Republicans that Democrats keep telling me are the only alternative. We’re fucked if those are our only choices. At the very least we need to force the Clintons to realize that they can’t bend over backwards for their corporate masters like they did in the 90s (It’s Clinton’s deregulations more than Reagan’s that fucked us over in 2009.) When the Mormons are concerned about income inequality destabilizing society, you know we’re already way too far.

  7. Naja pallida says:

    The USS Theodore Roosevelt has been reassigned from the Persian Gulf to off the coast of Yemen. They claim it’s just to intercept possible arms shipments from Iran to Yemen, but you don’t need an entire strike group, with an aircraft carrier, guided missile cruisers, submarines, and half a dozen destroyers just to intercept a few cargo ships and their escorts. We’re getting ourselves physically involved in yet another war. With zero public debate, and zero interest from Congress.

  8. Naja pallida says:

    At the rate governors like Rick Scott, Chris Christie, Scott Walker, Sam Brownback, et al, are decimating public pensions in a vain attempt to shore up the giant holes their failed policies have blown in their budgets, there won’t be many people remaining with anything left to lose in their state pension. The Social Security trust fun has already been spent by Congress too, they owe American workers nearly 3 trillion dollars. Of course, Republicans like to claim these programs are what is bankrupting us, but they would be fully funded if they’d stop stealing the money and spending it on other things, like tax cuts for their campaign donors and keeping war profiteers in business.

  9. Houndentenor says:

    and the victims of the next crash will be people with pensions through their states. That’s the big pile of cash the investment bankers went after while everyone was worrying about the last crash. The only thing left for the investment banksters to steal will be the social security trust fund. Will we let them take that too? Probably because our government doesn’t have any fucks to give about anyone but the 1%.

  10. mirth says:

    Jon,

    I would like to read your take on the military operations that are taking place, or have recently taken place, in some US cities.

    These events are now mentioned mostly on wingnut sites, but some mainstream news sites have documented their actuality.

    Would you consider this subject for a post?

    Thanks, and please excuse this off topic.

  11. Bill_Perdue says:

    The question will not be resolved by an individual but by a movement and a revolutionary party.

    Elections will have nothing to do with process except as a means to help organize and educate.

  12. mirth says:

    When a person of true socialist ideals is brave enough to step forward as a candidate, like a goodly portion of the country I’ll certainly pay attention. Until then, like I said, the point is not relevant.

  13. Bill_Perdue says:

    They won’t allow us to get elected.

    No capitalist politician is trustworthy. That does not apply to socialists. Individuals aren’t important but the socialist movement is.

    We’ll do our best to build mass movements and the union left with the goal of permanently and fundamentally change society. We have no stake in excusing the abuses of capitalist society because we represent the interests of workers, not the rich and our program is as relevant as it gets.

  14. Naja pallida says:

    In estimates done last year, only about 15% of Americans would see any impact with a change to the capital gains system. Most of those people are rich enough that they they wouldn’t really need to care much. The people who would really be hurt the most are those low-end investors, well below six figures invested, who tinker around in the stock market as another way of saving for retirement, or have a company stock investment purchase plan as part of their employment compensation – things outside of 401k/IRA. Most Americans wouldn’t see any impact at all, but most will still freak out and rail against it because Republican candidates will hammer it as a tax increase. In the long run, there are much better options for limiting speculation and gambling on Wall Street. Until the reinstatement of Glass-Steagall, and something serious done about the creation of toxic debt as an asset, we’re essentially screwed anyway. It’s only a matter of time before the next big bust. Exactly how the economy ran pre-New Deal.

  15. mirth says:

    Agree, but no Socialist is going to save us largely because one could not be elected in today’s socio-political climate and should one step forward, Obama taught us that NOTHING a candidate says is to be believed. So this point is not relevant.

  16. Bill_Perdue says:

    Clinton and the Democrats are the Party of NO when the question is an ENDA cleansed of all the garbage added on by Democrats to appease the cults. ENDA or legislation like it has been around for over 40 years and in all that time the Democrats and Republicans have refused to pass it, confirming their status as parties dominated by bigots and those who pander to bigots.

    Even better, we need a robust federal Civil Rights Amendment covering public access, employment and housing for ourselves, people of color, women, trade unionists and immigrant and imported workers that makes it easy to sue and win and provides harsh penalties for offenders.

    We aren’t going to get either from Democrats or Republicans. We’ll have to fight for our rights and create a militant mass movement politically independent from Democrats and Republicans. They’re hustlers on the make and except for trawling for votes and money they don’t give a damn about civil rights and civil liberties.

  17. Bill_Perdue says:

    1. The current economic crisis is described by Paul Krugman as the long depression. He essentially correct. Attempts to end it by increasing capital gains taxes will have no impact on the buying power of scores of millions who are working for low wages and starvation wages. That’s the real crisis and it can only be addressed by the left, not right wing scabs like the Clintons.

    2. The Crash of 2007 is the result of Bill Clinton’s promotion and signature on NAFTA and the deregulation bills of 1999 and 2000, which repealed Glass-Steagal and most other regulations on predatory lenders, who went mad with greed, which created the housing boom which went bust which led to the Crash of 2007.

    3. Increasing capital gains taxes will have zero impact on the European crises in Ukraine, Greece, Italy, Spain, Portugal and Ireland which increasingly threaten bringing down the whole international financial house of cards.

    The solution is a 100% tax on profits meant for stock dividends (except for workers or union owned retirement accounts) and management salaries and a 100% tax on all personal income from any source over $250,000.00 a year. Socialists can and will do that. Democrats and Republicans can’t and won’t do that.

  18. nicho says:

    Right. She’s more than just a “girl( (as you say). She’s also a corporatist and, given her past behavior, could actually be the most bellicose president we’ve had in decades.

    Karen Kwiatkowski, a retired Air Force lieutenant colonel who has spent her post-service days protesting the war policies in Iraq and Afghanistan, is more blunt. “Interventionism is a business and it has a constituency and she (Hillary) is tapping into it,” she tells TAC.“She is for the military industrial complex, and she is for the neoconservatives.”

    Clinton’s record as Secretary of State can be summarised by her response when asked about Gaddafi’s death in an interview: “We came, we saw, he died.” This was followed by a period of laughter that can only be described as giving the impression of her being in a state of pure ecstasy. Evidently, to Clinton, the brutal killing and sodomizing of Colonel Muammar Gaddafi – himself thinking he was surrendering under the safety of a white flag – was a foreign policy achievement to be proud of.

    http://www.counterpunch.org/2015/04/21/hillary-clinton-is-not-a-feminist/

  19. Houndentenor says:

    I’m so sick of this tired refrain. It’s Hillary or Ted Cruz. Obviously if that’s my choice in Nov 2016 I’ll vote for Clinton. But we aren’t even to the first primary yet. I can still think about other option until I get to vote in a primary in March of next year. That’s almost a year away. Stop playing this stupid card. The fact that any Democrat will be better than any Republican is a pathetic excuse for the sorry state of the Democratic Party at this point and the #1 reason why so many voters don’t bother showing up to vote at all. Try pushing the nominee towards better positions for a change. Hillary’s records on gay rights is okay but hardly stellar. I’d like for the party to do better. Either with someone else or by moving her towards a less crappy position on so many important issues.

  20. emjayay says:

    Yes, Scott Walker or Ted Cruz or Ben Carson would be so much better.

    I may prefer O’Malley or someone else in the primary, but whoever the eventual Democratic party nominee ends up being, they will be night and day compared to whoever gets the Republican nomination. Also as Secretary of State Clinton proclaimed the essential equality of gay people to the nations of the world at the UN in Geneva. I don’t think anything like that ever happened before. There’s more to her than being a girl.

  21. Indigo says:

    Well, yes, but let’s talk turkey for once. Gobble! Gobble! For all our hopes for responsible discussion and sensible solutions to the economic crisis, our Lords and Masters are not experiencing an economic crisis. Their concern is that law and order be focused on protecting their investments, property, and personal interests. Economics is the media story, the emerging Police State is what’s going on. I’m confident that Hillary can put it together and make it work so that a human face smiles and Wall Street smiles too. It’s not Big Brother, it’s Grandma’!

  22. Houndentenor says:

    I do not see any reason to support Clinton other than that she’s a woman. It would be great to finally have a woman in the oval office. Other countries are way ahead of us on this. But on almost every issue I care about her record ranges from weak to terrible.

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